For many who aspire to buy a first home or transition to a larger place, 2020 was a year of extraordinary frustration, as wannabe owners attempted to fight off rivals seeking the same few properties. What’s more, there’s been little letdown from this misery in the early months of this year.
“The craziness goes on and on. The bidding wars are so ferocious that people who lose homes emerge from the fights with emotional scars and lots of tears,” says Tom Early, an independent real estate broker.
The obvious problem is that “the supply/demand ratio between the number of available properties and eager buyers is way out of whack,” says Early, a past president of the National Association of Exclusive Buyer Agents (naeba.org).
This imbalance has sent home prices soaring, according to the widely quoted Case-Shiller home price index. For the 12 months ending in February, prices rose a sizzling 12%. Meanwhile, the stock of available properties has increased ever so slowly.
Yet relatively few young families who wish to make a major real estate purchase are backing off from their quest, despite the intense competition. Indeed, housing economists expect the number of would-be buyers to increase in coming months due to demographic trends.
Nadia Evangelou, the director of forecasting for the National Association of Realtors (nar.realtor), predicts that housing demand will continue to swell as household formations increase among those in the millennial generation (born between 1981 and 1996).
To underscore her point, Evangelou notes that in 2022 alone, 4.6 million millennials will reach the typical age to marry.
“Both low mortgage rates and favorable demographics will continue to boost homebuying activity for at least the next couple of years,” she says.
In reality, many young families refuse to put their housing dreams on hold indefinitely and rightly so, says Eric Tyson, a personal finance expert and co-author of “Home Buying for Dummies.”
“Clearly, most young families have income limits. But enterprising people find ways to temper their expectations in order to actualize their home-buying plans,” Tyson says.
Here are a few pointers for buyers:
-- Let go of the need for formal rooms.
Tyson says it’s more vital for families with young children to have a floor plan that encourages togetherness than to own a large house, especially now as more children return to classroom instruction and kids spend less time at home.
“Many people only use a formal dining room on major holidays such as Thanksgiving. But a family room connected to an eat-in kitchen is used all year long,” he says.
Large, comfortable common rooms -- often called “great rooms” -- help draw children out of their bedrooms, thereby allowing parents to monitor their kids at homework time, for example.
-- Seek a property with as many bedrooms as you can afford.
Newly built houses with a wealth of living space typically feature spacious master bedroom suites. In such houses, secondary bedrooms, designed for children and guests, are usually much smaller.
But Tyson says it’s more important for families to have an adequate number of bedrooms than a luxurious master suite.
“Nowadays, most buyers really want a separate bedroom for every kid, so all the children can get enough sleep, even if they have different school schedules,” he says.
-- Realize that two-story houses usually give you more space for the money.
It’s true that many buyers favor single-level living, including those who’ve hit middle age or beyond and wish to not rely on stairs.
But Tyson says people with school-age children might wish to consider the advantages of living on two levels. That’s because it’s easier to contain the noise and mess of growing children if their bedrooms are separated from the family’s common living space.
With a two-story house, parents can entertain guests on the first level while their kids are playing upstairs. Also, young families can typically get more space for the money in a two-story house.
“Because two-story houses require less land, you usually get more house for the same price,” Tyson says.
-- Question the assumption that your kids need a big yard.
Recalling their own carefree childhoods, some parents assume their kids need a similar setting to be happy. But what was important in your formative years isn’t necessarily vital for your children now.
“These days, children are much more heavily scheduled with sports, lessons and numerous other activities,” Tyson says.
Rather than focusing solely on yard size, Tyson suggests you think about the outdoor features of the neighborhood as a whole, such as parks and open space.
Surprisingly, neighborhoods where yards are smaller are often more child-friendly than those with oversized grounds.
“It’s good for children to live close to their neighborhood friends. That way they don’t have to be driven around to see playmates,” Tyson says.
-- Don’t succumb to pressure from your kids.
It’s not uncommon for children to protest their parents’ decisions regarding a home purchase.
To mollify their unhappy children, some parents let their kids influence which property they buy. But most children adapt quickly, and letting their feelings sway your planning could be a regrettable mistake.
“Maybe your children like one house better than another because it has purple bedrooms. But that’s no basis on which to make so major a financial decision,” Tyson says.
(To contact Ellen James Martin, email her at email@example.com.)